They believe that the bounce in rates that traditionally occurs in the run-up to the end of the tax year in April, as bank time their most attractive deals to coincide with savers rushing to fill their Isa allocation, will be a damp squib this year.

The move by Coventry and NS&I have left me questioning why they have both upped the rates at a time when they are tumbling elsewhere.

NS&I said it is due to ‘modernisation’ and the removal of savers being able to access the account via

AT A GLANCE: ABOUT CASH ISAS

Each year in
April, savers are given a fresh Isa allowance that qualifies for
tax-free interest. For 2012-13, the limit has been set at £5,640 for
cash Isas and you can deposit anything up to this amount into a cash Isa
until 5 April 2013

Cash Isas have become a popular
product since they were launched 14 years ago to develop and encourage
the savings habit through tax breaks. Savers have piled a huge
£210billion into these accounts, with £28billion added in the past 12
months.

the Post Office, while Coventry say it is to ‘benefit’ its loyal customers.

I applaud them both for the hikes, but could this be the first signals of the subdued cash Isa season savers may be set for?

Are they trying to hold onto the custom they already have rather than attract new savers?

If so, it could mean that neither launch ‘best buy’ Isa rates for the new tax-year.

The smaller the number of providers vying for a place at the top of best buy charts, the smaller the reward will be for savers looking to fill their tax-free cash Isa pot as competition lags between competitors, leaving rates floundering.

It remains to be seen if this is the case - but if more providers bring out nuggets of ‘good’ news like this to savers, it may mean the cash Isa season may be more about loyalty in 2013, and not attracting new customers through decent rates.

Robbing Peter to pay Paul

Sue Hannums, from rate checking website Savings Champion, also believes that the move, although a good one, might be an indication that providers are keen to keep business - not attract it.

She said: ‘My thoughts is that this may end up being the Isa season. Rather than launching new high paying accounts to pull in new money, they’re bringing rates up for existing Isa customers to encourage them not to move.

‘I also suspect that they’re acutely aware that annual statements will be dropping soon and many Isa savers may take this as the last straw to move money – good way to stop them is telling them their rate is being increased.

‘I sound very cynical I know and honestly, I think it’s a brilliant move and hope more will follow suit. It makes a refreshing change that providers are actually rewarding their loyal customers.

‘However someone will be paying for it and I think we’ll continue to see a rise in the number of existing non-Isa accounts being cut. Robbing Peter to pay Paul.’